Watch video on You Tube here. Bernard Hickey details the key news overnight in 90 seconds at 9am in association with ASB, including news from the Reserve Bank of New Zealand that it plans to use its 'core funding ratio' as a complementary tool for monetary policy, adding to the power of the Official Cash Rate. It was introduced in June and is likely to be confirmed by April next year at 65% to rise to 75%. This core funding ratio forces the banks to raise more funds locally and for longer terms, which in turn pushes mortgage and term deposit rates up. RBNZ Governor Alan Bollard talked about it yesterday at a parliamentary committee hearing as a complementary tool for monetary policy that could act as an automatic stabiliser This would keep a lid on bank lending when 'hot money' is cheap and keep the RBNZ from raising the OCR so high when the economy is hot, which would be good for exporters. Meanwhile the NZ dollar was firm around 74 USc overnight after Tim Geithner reassured some of a strong US dollar.
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